Feature

The Birth of Rent Control in San Francisco

by Jim Forbes & Matthew C. Sheridan

Twenty-five years ago, San Francisco Supervisors Louise
Renne and John Molinari sat down with residential real
estate tycoon Angelo Sangiacomo to plead with him to
halt the large-scale rent increases his company, Trinity
Properties, had imposed on their district’s numerous
tenants. At the time, rent control was catching on
like wildfire throughout the state. “We feared
this was the igniting spark for rent control in San
Francisco,” Renne said. Sangiacomo declined to
alter his stand on rent increases.

Shortly after this meeting, the San Francisco Board
of Supervisors passed a 60-day rent freeze by an 8
to 3 margin. Only Supervisors Quentin Kopp, Lee Dolson
and Ron Pelosi voted against it. Previous attempts
to enact rent control in the city had failed, but suddenly
as a large segment of the mainly middle-class renters
became affected by these rent increases, politicians
in the city began to pay attention. In the buildings
managed by Trinity Properties, many of the tenants
were generally well off and well connected. In addition,
tenants of German recluse Guenter Kaussen who owned
2,000 units in the Tenderloin were hit with huge increases
as the market went wild and Kaussen took advantage
of the disrupted economic climate. Irate tenants attacked
City Hall with phone calls, letters and in interviews.

Aware that something needed to be done to address
tenants’ legitimate
concerns, Mayor Feinstein met with her advisors. As Ted Deinstfrey, then of
the California Housing Council, remembers it, “Her fear was that rent
control would destroy the city’s housing stock.” Deinstfrey advised
that as long as vacancies were not regulated, disinvestment would not occur.
On June 13, 1979, less than two months into the rent freeze, then acting Mayor
Gordon Lau signed San Francisco’s first rent-control law since World
War II.

Many factors converged in the late 1970s to bring
about the dictate of rent control not only here but
in nearly ten cities around the state, including Los
Angeles. Renne believes that had Trinity Properties
cooled their guns, “We would not have rent control
in the city today.” Deinstfrey, however, believes
inflation was clearly the motivating factor in its
enactment. Inflation averaged 8 percent in the Bay
Area during the 1970s; renters were forced to pay rents
that were changing monthly as the dollar devalued and
the demand for hard assets, especially real estate,
grew. Deinstfrey called it mailbox roulette, for tenants
never knew what kind of huge rent increase might be
waiting for them in the mail.

Proposition 13 threw fuel
on the fire. One of Howard Jarvis’ arguments
for rolling back and rapidly freezing escalating property taxes (an inflation-induced
mess, too) was that the savings would be passed onto tenants. Although several
large San Francisco property owners passed Proposition 13 savings on to some
7,000 tenants, most landlords did not. In jurisdictions with large tenant populations
like San Francisco, the empty promises became a rallying cry for activists.
In San Francisco, these groups had recently been empowered by Mayor George
Moscone and the antigrowth Rainbow Coalition that had taken City Hall in 1975.
Activists like Calvin Welch wanted a rebate codified and, in 1978, attempted
to do so at the ballot box with Proposition U, which was narrowly defeated,
53 percent to 47 percent. Landlords in many other cities were not so lucky.
To this day, Welch says that because of his actions, “Jarvis was the
father of rent control.”

By the fall of 1978, the rent rollback movement was
gathering steam both on the local and statewide level.
On election day most voters rejected the various proposals.
The 1978 election, however, brought rent control to
the cities of Cotati and Beverly Hills. Cotati’s
was severe and included vacancy control. Palo Alto
and Santa Cruz, along with San Francisco, offered renters
a chance for a rent rebate, but the voters said no.
However, in Berkeley and Davis, they said yes. Berkeley’s
proposition included a rent rollback and paved the
way for a stiffer measure later, while the courts later
overturned Davis’ initiative. Santa Monica also
rejected a rent rebate proposal, but the loss seemed
to galvanize proponents and led to a convincing rent-control
victory a few months later in 1979. Santa Barbara landlords
fought hard at the polls and defeated that city’s
initiative.

The battle over rent rollbacks made headlines
and eventually sparked people’s
interest in the possibility of rent control. In Los Angeles, rents on over
537,000 units (two-and-a-half times San Francisco’s inventory) had been
frozen in place since the fall of 1978. In the spring of 1979, they were brought
under the control of a citywide housing office, with the registration of units
required and a 7 percent annual cap on rent increases. This would later become
the model for San Francisco’s rent
ordinance.

Inflation and Proposition 13, however, might not have
made rent control a fait accompli if the political
and economic climate of the state had not been so ripe.
A poll conducted by Field Enterprises in June 1979
showed 56 percent of all Californians supported rent
control, while only 31 percent opposed it. In the Bay
Area, it was 2 to 1 in favor. This is in a state where
55 percent of the voters were homeowners; in the Bay
Area it was 60 percent.

Public awareness may have been one factor. Landlords
had already brought the term rent control to the attention
of voters with Proposition T in 1976, a statewide anti-vacancy
control initiative that failed miserably at the polls,
garnering only 35 percent in favor. Later, Assemblyman
Tom Hayden and movie actress Jane Fonda crisscrossed
the state in support of rent control. On the flip side,
by 1978 the State Legislature attempted to contain
the spread of local battles by proposing a statewide
rent-rollback measure that was supported by Governor
Brown. However, the Senate was not convinced. Liberals
believed it did not go far enough for tenants, while
the conservatives thought it was too much. It failed
11 to 22 in the Senate. In cities with large tenant
populations, the perceived impotence at the state level
only invigorated local activists. San Francisco was
especially vulnerable.

Long controlled by a generally pro-growth conservative
political apparatus, despite large numbers of tenants,
the switch to district elections in 1976 had much to
do with the city’s inability to resist rent control.
With it came no less than four progressive supervisors,
including Jim Gonzales and Harry Britt, who began to
forge a tenant-based coalition that organized itself
well enough to bring the first of four vacancy-control
measures to the voters in November 1979 in the form
of Proposition R. Proposed a few short months after
the Board of Supervisors enacted the original Rent
Ordinance, Prop. R was far too comprehensive and wordy.
Voters resoundingly rejected it.

The growing liberal and gay population was also a
factor. Replacing conservative white middle-class families
that continued to flee to the suburbs almost one for
one, their votes became especially pivotal after the
assassination of Mayor Moscone and Supervisor Harvey
Milk.

Vacancies had also plummeted. Although San Francisco’s
vacancy factor had always been one of the lowest in
the country, years of steady construction and suburban
flight had basically kept housing in balance for a
decade and a half. By the late 1970s, however, with
home prices screeching skyward and construction down
to a third of its early 1970s level, the vacancy factor
dropped below the unhealthy level of 2 percent.

San
Francisco’s rental housing market was also besieged
on two other fronts that tugged hard at the sympathetic
hearts of city voters and policy makers. Condominium
conversions were at an all-time high. In the mid-1970s,
the loss of rental housing from condo conversion averaged
100 per year, and by the late 1970s it was 1,200. This
phenomenon triggered its own special restrictions in
1982.

The International Hotel incident
in Chinatown was another. Highlighting the loss of
hundreds of residential hotel units to the tourist
trade, the extensive media coverage of dozens of
senior citizens escorted from their homes by police
acting on a court-ordered eviction did nothing to
slow public sentiment toward the Rent Ordinance,
as well as the higher profile antigrowth measures.
Residential hotels received their own ordinance in
1984.

Looking back, many lament the enactment of rent control
as the beginning of a terminal disease, and at times
it seems that way. But the politicians of twenty-five
years ago cannot be blamed. If anything, Mayor Feinstein
and her moderate supporters deserve credit for the
fact that the enactment of rent control in San Francisco
was not much worse. The result was an effective compromise
that did not even go as far as Los Angeles’ ordinance,
a city with a much more evenly balanced voter population.
Had they not given us the Arbitration (Renne’s
term) and Stabilization (Gonzales’ term) Ordinance,
voters may have enacted the much more punitive Proposition
R. As it turned out, with the help of rent control
experts, Prop R was defeated 59 percent to 41 percent,
and the real concern of San Francisco’s leaders—vacancy
control—was prevented.

Editor’s note: Mr.
Sangiacomo declined to be interviewed for this article.